Euro Area Economic Outlook
The economy should expand at a paltry pace next year. Germany’s projected recovery and lower inflation will underpin growth. Slowdowns in the Mediterranean economies and the lagged effects of previous monetary policy tightening will restrain activity, however. Potential turbulence in the banking and financial sectors and large public debts are risks.
Euro Area Inflation
Harmonized inflation fell to 2.9% in October (September: 4.3%). Energy prices fell more sharply, while prices for services, non-energy industrial goods, and food, alcohol and tobacco rose more softly. Inflation should fall in 2024 versus 2023’s average on still-high interest rates and a higher base effect. A wage-price spiral and commodity price spikes are upside risks.
This chart displays Economic Growth (GDP, ann. var. %) for Euro Area from 2010 to 2022.
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
| GDP per capita (USD) | 40,732 | 39,820 | 38,719 | 43,477 | 41,671 |
| Economic Growth (GDP, ann. var. %) | 1.8 | 1.6 | -6.2 | 5.9 | 3.4 |
| Private Consumption (ann. var. %) | 1.5 | 1.4 | -7.8 | 4.4 | 4.2 |
| Fixed Investment (ann. var. %) | 3.2 | 6.5 | -6.2 | 3.7 | 2.8 |
| Industrial Production (ann. var. %) | 0.8 | -0.7 | -7.7 | 8.9 | 2.3 |
| Unemployment (% of active population, aop) | 8.2 | 7.6 | 8.0 | 7.7 | 6.7 |
| Fiscal Balance (% of GDP) | -0.4 | -0.6 | -7.1 | -5.2 | -3.6 |
| Public Debt (% of GDP) | 86.1 | 84.1 | 97.2 | 94.8 | 91.0 |
| 1-week Repo Rate (%, eop) | 0.00 | 0.00 | 0.00 | 0.00 | 2.50 |
| Exchange Rate (ALL per USD, eop) | 1.14 | 1.12 | 1.22 | 1.14 | 1.07 |
| Current Account Balance (% of GDP) | 2.9 | 2.5 | 1.7 | 2.8 | -0.7 |
| Merchandise Trade Balance (USD bn) | 320 | 334 | 379 | 328 | -86 |
| Merchandise Exports (USD bn) | 2,738 | 2,667 | 2,481 | 2,958 | 3,099 |
| Merchandise Imports (USD bn) | 2,418 | 2,333 | 2,102 | 2,630 | 3,185 |
| International Reserves (USD bn) | 823 | 914 | 1,079 | 1,197 | 1,187 |
| Money (ann. var. of M2 %) | 4.5 | 5.7 | 11.0 | 7.1 | 3.6 |